New Belgian Prime Minister Herman Van Rompuy, center left, is sworn in by Belgium's King Albert II, center right, at the Royal Palace in Laeken, Belgium, Tuesday Dec. 30, 2008

Herman Van Rompuy, the man widely expected to be appointed the first President of Europe this week, has called for new eco-taxes and levies on the financial sector to fund a more powerful European Union.

Belgium's prime minister made the controversial proposal, leaked to a Flemish newspaper, during a secret dinner to promote his candidacy hosted by the elite Bilderberg Group.

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The comments have added to a backlash against Mr Van Rompuy who, while still the favourite, has been identified as a federalist who is being championed as part of a Franco-German "stitch up" ahead a summit dinner that will appoint an EU President in Brussels on Thursday.

Mr Van Rompuy told an audience of industrialists and politicians that new European environmental and financial taxes, levied by Brussels, should fund the EU to replace resented national contributions being cut by governments because of the recession.

"The possibilities of financial levies at European level must be seriously examined and for the first time the large countries in the union are open to that," he said, according to the newspaper De Tijd.

The idea of using VAT, fuel duties and aviation taxes to give the EU a direct and independent source of income has long been demanded by the European Commission. Proposals currently circulating in Brussels could mean that all airline tickets, shopping and petrol station receipts in Britain list the amount of aviation tax, VAT or fuel duty that goes directly to Brussels as an "EU tax".

Federalist politicians support the plan as a way of giving Brussels autonomy from national treasuries, who begrudge EU contributions, and to provide the Commission with its "own resources" to further expand European integration.

But any plans to give the EU any direct claim or power over national taxation, including VAT, are opposed by Britain, Denmark and other more traditionally Eurosceptic countries.

"This speech is not going to do him any favours at all," said a European diplomat.

Mr Van Rompuy attended the Bilderberg dinner last Thursday at the invitation of the Vicomte Davignon, a former European Commission vice-president and a leading EU federalist.

The setting was the highly symbolic Castle of the Valley of the Duchess, or Chateau de Val-Duchesse, where the EU's founding Treaty of Rome was negotiated in 1957 and later the venue for the first ever European Commission meeting.

Among the diners was Henry Kissinger, the former US State Secretary and Nobel Prize winner who started the debate that led to the creation of an EU President after he famously asked: "Who do I call if I want to call Europe?"

Mr Van Rompuy eclipsed Tony Blair at an EU summit two weeks ago, with French and German support, to become the hotly tipped favourite to become EU President, a post created by the Lisbon Treaty.

His office has tried to distance him from the comments after the Belgian leader said a fortnight ago that "the most important thing now is not to say the wrong thing".

"The prime minister did not argue in favour of the introduction of a green tax at the European level," said a spokesman. "He indicated that it was necessary to carry on thinking about structural financing at the European level, for example on financial transactions, as is also being discussed at world level and at the G20."

William Hague, the Shadow Foreign Secretary, said: "Britain would not be the only EU country that would find a proposal to give the EU tax-raising powers totally unacceptable. Advocacy of such a policy is not a fruitful use of anyone's time."

Many officials and diplomats now believe that Nicolas Sarkozy, the French President and Angela Merkel, the German Chancellor, have overplayed their hand by backing a federalist candidate.

"Van Rompuy is being seen as the Sarkozy-Merkel candidate and there is resentment at a perceived Franco-German stitch up," said a diplomat.

Eyebrows were raised at the Oct 29 summit when President Sarkozy held a private 15-minute long "interview" with Mr Van Rompuy. Later that evening, Chancellor Merkel made a beeline across the summit meeting room for Mr Van Rompuy, the pair then left together for a meeting.

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